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Family labour supply when the husband is eligible for early retirement

Author

Listed:
  • Erik Hernæs
  • Steinar Strøm

    ()

Abstract

When the husband works in the private sector in Norway the take-up rate of early retirement during the first twelve months after becoming eligible (once during 1993 and 1994) was around 40 percent. If the husband works in the public sector the corresponding take-up rate was around 25 percent. A model with forward-looking and utility maximising merried couples, where the husband only is eligible for early retirement, has been estimated on these data. The estimated model has been used to predict the labour supply responses of the husband and wife when pensions are taxed as wage earnings. Taxing early benefits as labour earnings induces a substantial decline in retirement and a substantial shift towards full-time work among males. Females tent to decrease their labour supply a little. An additionsl 10 percent in the pre-tax pensionincome has a positive impact on full-time work among both spouses, but the effect is a magnitude smaller than the effect obtained by changing taxation. Husbands in poor households tend to increase their labour supply more than husbands in rich households. Poor households are also more negatively hit in terms of loss in expected household welfare than the rich households.

Suggested Citation

  • Erik Hernæs & Steinar Strøm, 2000. "Family labour supply when the husband is eligible for early retirement," ICER Working Papers 04-2000, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:04-2000
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    File URL: http://www.bemservizi.unito.it/repec/icr/wp2000/Strom42000.pdf
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    Cited by:

    1. Christian Brinch & Erik Hernæs & Steinar Strøm, 2001. "Labour Supply Effects of an Early Retirement Programme," CESifo Working Paper Series 463, CESifo Group Munich.

    More about this item

    Keywords

    Early retirement; married couples; microeconometrics;

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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